As many cable companies in the United States continue to lose video customers to increasing competition, there is the prospect of further consolidation of operators. Time Warner Cable, which lost 306,000 video customers in the last quarter and 745,000 over the last 12 months, could be a target.

Charter Communications is reported to be interested in a merger with Time Warner Cable, the second largest cable company in the country, which has 11.4 million video customers. Charter has 4.2 million video customers, a number that has also been declining. Among the investors in Charter is Liberty Media, whose chairman John Malone has been pushing for further consolidation in the cable industry.

Time Warner Cable is reportedly considering the possibility of a defensive merger with Comcast, the largest cable operator in the United States, with 21.6 million video customers. That would create a cable giant, with over 36 million television subscribers. It would put the combined operation well ahead of Liberty Global, which has 21.8 million video customers internationally across a number of operators.

For cable companies in the United States, faced with a declining share of the market as a result of competition from satellite and telco operators, consolidation may represent the best way to gain subscribers and maximise economies of scale. In particular, it would put them in a better bargaining position with programming providers.

Any such merger would have to address possible competition issues, although cable operators do not overlap in many areas in which they operate. One solution could result in selling off some areas separately.

A major merger would put more pressure on smaller cable operators, which could in turn prompt further consolidation in the cable market.

Yet this is nothing like the scale of consolidation that is envisaged in China, where there are plans to bring together regional operations into a national network. China accounts for almost half of the digital cable television subscriptions in the world.